Receiving a letter from the Canada Revenue Agency about your tax return can be unsettling, but most CRA correspondence is routine. Understanding the difference between a review, a reassessment, and a full audit — and knowing exactly how to respond — protects your rights and minimizes stress. Here is a comprehensive guide to what happens when the CRA examines your return.
After filing your return, the CRA sends a Notice of Assessment (NOA). This confirms your return was processed and shows your refund, balance owing, RRSP room, and carry-forward amounts. An NOA is normal and expected.
A Notice of Reassessment (NOR) means the CRA reviewed your return and made changes. This could be because you requested a change (via ReFILE), because the CRA found a discrepancy, or because a matching program detected inconsistencies between what you reported and what was reported by employers or financial institutions. A NOR may increase or decrease your refund or balance owing.
The most common type of CRA contact. The CRA's automated systems flag returns that appear to have errors or uncommon claims and request supporting documentation. You receive a letter asking you to provide receipts or other proof for specific items on your return. This is not a full audit. Respond within the requested timeframe (usually 30 days) with the documentation requested and most processing reviews close quickly.
Before issuing your refund, the CRA may ask for documentation to support a credit or deduction. This is common for new homeowners claiming the Home Buyers' Amount, first-time charitable donors with large claims, or returns with large RRSP deductions. Provide the documents and the refund is released.
A more detailed examination of specific items on your return. A CRA auditor reviews your file and may ask for multiple types of documentation. This is still done by correspondence and phone rather than in person. A desk audit focuses on one or a few specific issues rather than your entire return.
The most intensive type. A CRA auditor meets with you (or your representative) in person — typically at your home, business, or accountant's office. Field audits are usually reserved for business income, complex tax matters, or situations where the CRA believes significant amounts may be unreported. Field audits examine your complete records.
The CRA uses risk assessment algorithms to select returns for review. Common triggers include:
The CRA also selects a portion of returns randomly regardless of content. Being selected does not imply wrongdoing.
You have specific rights when dealing with the CRA. You have the right to be treated professionally and respectfully. You have the right to complete and accurate information about your situation. You have the right to privacy and confidentiality. You have the right to formal objections and appeals if you disagree with a CRA decision. You also have the right to be represented by a tax professional, accountant, or legal counsel.
Read the letter carefully and note the deadline for response. Identify exactly what the CRA is asking for. Gather all relevant documentation including receipts, invoices, contracts, and any other evidence supporting your claims. Respond in writing with all requested documents. If the deadline is insufficient given the volume of documentation required, contact the CRA to request an extension — these are often granted.
Keep copies of everything you send the CRA. Send documents by registered mail or through the CRA My Account secure message portal so you have proof of submission.
If the CRA proposes changes to your return that you disagree with, you have the right to object. File a formal Notice of Objection within 90 days of the date of the Notice of Reassessment (or one year from the original filing deadline if that is later). You can file a Notice of Objection through CRA My Account, by mail, or through a tax professional.
After receiving your objection, the CRA's Appeals Division reviews your case independently of the auditing division. Many objections are resolved in the taxpayer's favour when proper documentation is provided.
If the objection is not resolved to your satisfaction, you can appeal to the Tax Court of Canada. Small claims (under $25,000) use an informal procedure that does not require a lawyer, though you can have one. Larger amounts use the general procedure which is more formal. Tax Court appeals are final for most purposes.
The CRA can reassess most returns for up to 3 years after the date of the original assessment. For returns involving fraud or misrepresentation, there is no time limit. Keep all supporting documents for your tax returns for at least 6 years — ideally longer for major transactions like home purchases, RRSP histories, and business records.
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